GEORGIA

Photo by: hugy

Republic of Georgia

Sakartveld Respublika

COUNTRY OVERVIEW

LOCATION AND SIZE.

Georgia is located between Europe and Asia. East of the Black Sea,
Georgia is separated from Russia by the Caucasus Mountains. It borders
Turkey and Armenia to the south and Azerbaijan to the east. Georgia has
a land area of 69,700 square kilometers (26,911 square miles) making it
slightly smaller in size than the state of South Carolina. Approximately
75 percent of Georgia's territory is 500 or more meters above sea
level. The country has a coastline of 315 kilometers (196 miles).

POPULATION.

Georgia's most recent official census counted 5,400,481 in 1989.
Recent state statistics, which underestimate the volume of
emigration
, keep the figure around 5.4 million. The U.S. Central Intelligence
Agency (CIA)
World Factbook,
however, estimates the population in July of 2001 at 4,989,285. With
estimated rates of 10.87 births and 14.52 deaths per 1,000 population
and a net out-migration rate of 2.57 per 1,000 population, Georgia had
an estimated growth rate of-0.62 percent in 2000.

Georgia is an ethnically diverse state. Georgians comprise only 70
percent of the population, while there are minorities of Armenians (8
percent), Azeris (6 percent), Russians (6 percent), Ossetians (3
percent), and Abkhazians (1.8 percent). These groups, while small in
number, have posed problems for the T'bilisi government as they
are concentrated in specific areas and some have aspirations towards
independence. Georgia contains 3 autonomous republics: Abkhazia, Adjara,
and South Ossetia.

INDUSTRY

MINING.

Georgia used to possess one of the world's richest manganese
deposits in the Tchiatura and Sachkhere regions: present-day resources
are estimated at about 200 million metric tons. Significant deposits of
high quality mineral and drinking water exist in Georgia. Two-thirds of
estimated resources (amounting to 17-18 cubic kilometers/4-4.3 cubic
miles) are located in western Georgia at 10 to 15 meters depth while the
remaining third in eastern Georgia is also accessible at a depth of 250
to 300 meters. A thriving industry during the Soviet period, bottled
water production declined sharply after independence and by 1993 was
down to 5 percent of pre-independence levels. In recent years, however,
the mineral water industry has revived with the "Borjormi"
label leading the way.

MANUFACTURING.

Georgia's manufacturing base is so weak that many of its most
important enterprises can only operate without paying for electricity.
The government, afraid of the potential redundancies, has refused to
take decisive action. The metallurgy and chemical sectors are
commodities of most importance to the Georgian economy, specifically
manganese ore, ferromanganese, mineral fertilizers, and synthetic
ammonia.

Other industrial activities include domestic processing of agricultural
products, which accounted for 4.7 percent of overall GDP in 2000, and
construction, which accounted for 3.5 percent. While construction has
been increasing relatively rapidly (4 percent in 2000), much of this
activity is part of the
shadow economy
.

SERVICES

TOURISM.

Georgia was once the tourism center of the Soviet Union with 3 million
visitors annually, 250,000 of whom came from outside of the USSR. As
Georgia descended into civil war in the early 1990s, its tourism
industry ground to a halt. According to Georgia's State
Department of Tourism and Resorts, about 383,000 people visited Georgia
in 1999, of which 219,000 came from the CIS and 164,000 from other
countries. Many of the hotels and health resorts that had catered to
tourists were used to house the thousands of internally displaced
people who fled to the capital after the defeat of Georgian forces in
Abkhazia. Tourism is also hindered by a cumbersome visa regime that
requires letters of invitation and submission of passports to embassies
prior to departure. Visas can be obtained upon arrival at the airport
but only at very high prices.

The attractions for travelers in Georgia include the beautiful coastal
regions along the Black Sea, though the 2 autonomous republics of
Abkhazia and Adjara dominate most of the coastline. With its large
mountain ranges (the highest peak is 5,150 meters/16,897 feet), Georgia
is ideal for skiing, and the Bakuriani and Gudauri ski resorts were very
popular among Russian tourists in the Soviet era. Revival of this
tourist attraction will, however, require heavy investment and continued
political stability. Though tourism could become one of the
country's leading industries, hotels and restaurants contributed
only 2.2 percent of GDP in 2000.

TEXTILES.

The textile industry is also one that should witness significant
development in the coming years. A legislative framework for investment
and close proximity to EU markets complements the availability of raw
materials and a cheap skilled workforce. Eighty-five percent of textile
companies have been privatized, either as joint stock companies or
companies with limited liability.

FINANCIAL SERVICES.

The legacy of communism and the reality of corruption ensured that the
creation of a strong banking system in Georgia would be troubled. The
absence of an effective banking sector made it difficult for
entrepreneurs to get the capital needed to invest in private
enterprises, while government interference forced banks to give loans to
dubious projects and individuals, further debilitating the development
of financial services. Hundreds of banks were established in the early
1990s with capital of US$500 or less. Between 1998 and 2000 the number
of banks fell from 294 to 33 and more closures are expected as a result
of bankruptcy, closure, or merger.